Weaker than Expected Jobs Report, Manufacturing Slides

Jobs were added last month, but at a considerably slower pace suggesting the market is cooling and the economy may be in for a slowdown.

The latest report from the Bureau of Labor Statistics shows employers added 126,000 jobs in March. It was the first month in the last 12 that the number of new jobs came in below 200,000.

Manufacturing was hit hard, reporting the loss of about 1,000 jobs for March. The strong dollar and increased imports have been a big drag on the sector according to Scott Paul, president of the Alliance for American Manufacturing, “That was one wretched jobs report for manufacturing. Losses in March combined with steep downward revisions in January and February have washed away the narrative of a resurgent manufacturing base. The effects of the strong dollar are clear: it’s a big loser for factory jobs in the United States. And surging steel imports are already contributing to mass layoffs."

Low oil and gas prices are giving manufacturers headaches as producers hold back on buying drilling and other equipment, something TD Senior Economist James Marple says we're going to really start seeing the effects of, "While the sector is tiny compared to the size of the American economy, the magnitude of the decline in investment will have a noticeable impact on economic growth in the first half of this year. This will be more than offset by the saving to consumers from lower energy prices, but while the benefits will take time to accrue leading, the losses are concentrated."

Average hourly earnings were up in March by 7 cents to $24.86, a 2.1% increase year-over-year. Hourly earnings for private-sector production and non-supervisory employees rose by 4 cents to $20.86 for March. When it comes to wages, Marple notes, "It's not all about wage growth, but pretty close. Should average hourly earnings continue to rise at the 0.3% monthly pace set in March, they will hit 3.6% year-over-year by December. Something to think about as we digest March's slowdown in job growth."

Unemployment remains at 5.5% on the weakest jobs report since December 2013, and way off from analysts who predicted the addition of 250,000 new jobs.

The numbers from January and February were revised down in the latest report adding up to a loss of more than 69,000 jobs that were previously reported.